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Stocks fall, led by Dow

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Euro eases after ECB says Sept. rate move "wide open"

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Dollar gains after U.S. manufacturing, jobs data

(Updates to 4:45 pm ET)

By Isla Binnie

NEW YORK, July 18 (Reuters) - World stock indexes fell

on Thursday as a selling mood around high-priced technology

stocks crept into the rest of the market, while the dollar index

gained after strong U.S. economic data.

Japan's yen sagged after scaling a six-week high, while the

euro eased after ECB President Christine Lagarde held off any

interest rate change but said a decision at the ECB's next

meeting in September was "wide open".

The Dow Jones Industrial Average closed down 533.06

points, or 1.29%, at 40,665.02, halting a series of consecutive

closing highs. The S&P 500 lost 43.68 points, or 0.78%,

to 5,544.59.

All of the major S&P 500 indexes ended lower, except for

energy, which was up 0.3%.

The Nasdaq Composite lost 125.70 points, or 0.70%,

to 17,871.22, giving back early gains. It had initially

recovered from Wednesday's session, its worst since December

2022. Europe's STOXX 600 index fell 0.16%.

MSCI's gauge of stocks across the globe

fell 6.64 points, or 0.81%, to 816.95. The STOXX 600

index fell 0.16%.

"The technology sell-off seems to be spreading to the rest

of the market," said Gene Goldman, chief investment officer at

Cetera Investment Management in California.

Goldman and others said investors had already factored in

good news, including expectations the Federal Reserve would cut

interest rates in September and that a recession would likely be

avoided.

Anticipation of further comments from Republican

presidential candidate Donald Trump later on Thursday at the

Republican National Convention could add to nervousness, Goldman

said.

"He may suggest more tariffs, which is a concern for

technology companies," Goldman said.

DATA BOOSTS DOLLAR

In the foreign exchange market, the dollar index advanced

after strong U.S. manufacturing data and jobless data that did

little to suggest a significant slowing in the labor market.

The dollar index, gained 0.5% at 104.19, after

hovering close to its weakest level in four months. The euro

was down 0.37% at $1.0896, easing from a four-month high

on Wednesday.

Initial claims for U.S. state unemployment benefits

increased 20,000 to a seasonally adjusted 243,000 for the week

ended July 13, the Labor Department said on Thursday. Economists

polled by Reuters had forecast 230,000 claims for the latest

week, although the data was not considered to be a notable shift

in the labor market due to seasonal factors.

A closely watched part of the Treasury yield curve steepened

as the uptick in unemployment claims added to the view that the

Fed is likely to begin cutting interest rates in September.

Interest rate sensitive two-year yields were last

up 3.4 basis points on the day at 4.463% and benchmark 10-year

yields rose 4.4 basis points to 4.19%.

The yield curve between two-year and 10-year notes

steepened one basis point on the day to minus 27

basis points.

Investors now view the Fed cutting interest rates as a sure

bet.

"The market thinks it's more likely there will be the first

Fed rate cut in September if inflation continues to go in the

right direction," said JoAnne Bianco, investment strategist at

BondBloxx, which is based in Larkspur, California.

The yen came off its highs after daily data showed little

fresh evidence of intervention from authorities. It

weakened 0.75% against the greenback at 157.36 per dollar.

The yen has dropped sharply against the dollar this year as

the wide interest rate difference between the U.S. and Japan

weigh, creating a lucrative trading opportunity, in which

traders borrow the yen at low rates to invest in dollar-priced

assets for a higher return, known as carry trade.

Rate cut expectations kept gold near record levels

during the session, although it eased later to $2,441.61 an

ounce.

Oil rose throughout the day before steadying. Brent crude

futures settled higher, up 3 cents at $85.11 a barrel, but U.S.

crude slipped 3 cents to $82.82 per barrel.

(Additional reporting by Sinead Carew and Caroline Valetkevitch

in New York; Editing by Susan Fenton and Stephen Coates)